The mapping of the human genome was a giant leap forward for
the biotech industry. Using a DNA recipe to successfully cure
a disease, however, is proving to be a great deal more
challenging. In spite of this, Baxter is finding out that its
also a great deal more rewarding. The company's genetic
therapies for life-threatening diseases are due to improve
earnings by 20% annually and expand gross profits margins to
60%. This is in stark contrast to the company's 5% earnings
growth it has achieved as a medical supply business. As for
our play, BAX shares kept climbing on Friday and set a new all
time high of $93.48. The leg up came on fairly good volume of
1,537,400 shares traded and leads us to believe that there are
still plenty of buyers to lift the stock higher. A positive
MACD and higher highs in the OBV indicator have also helped to
confirm the potential for more gains. So, with that said,
we'll expect to see the next key level of resistance to appear
at the $95 mark. Look for a potentially harder barrier to come
at the century mark, which can often times mark the peak of a
rally. Consider using a trailing stop strategy, should the
stock bounce sharply from either of these levels. Support is
at the 5-dma of $91.89 and then at the 10-dma of $90.70. We'll
look for potential entry points to occur when BAX rallies
through resistance or bounces from support on good midday
volume of at least 900,000 shares. Our stop of $89 will
provide us with downside protection.